Oil prices dive downward ... $40 ... $38 ... $36, a descent that may or may not continue. From an Alaskan perspective, the rapid decline in oil's value is as unnerving as watching an altimeter unwind from the back seat of a Super Cub. A world oil glut produced by tar sands and fracking and international market competition caused the price crash. But the record high prices just before the crash inspired oil companies to lease, drill and extract with fury. Kind of like the Petroleum Olympics, with everyone taking home gold until the medals ran out. Economists tell us the price of oil has dropped 70 percent from 18 months ago.
Now, with Iran back in production, additional surplus could force prices even lower. The massive surplus has created an old-fashioned schoolyard stare-down between oil companies. If one company flinches and reduces production, it risks losing market share. So, the industry maintains its gaze on production, which increases surplus, which drives oil prices even lower.
Surplus. We associate the word with wealth, with sound fiscal management, with abundance and good health. For a generation, Alaskans reveled in limitless budgets, with 2008 generating an unparalleled surplus.
In May 2008, when the federal government ran a budget surplus, President George W. Bush signed the Economic Stimulus Act, which awarded individual Americans $600, and couples $1,200 to kickstart the economy — a one-time federal PFD check, if you will. In Fall 2008, Gov. Sarah Palin distributed the ACES Resource Rebate that handed another $1,200 to every Alaskan to help defray high energy costs. At the same time, Alaska's Permanent Fund dividend checks landed with a thud in our bank accounts, a record $2,069 per Alaskan. In 2008, through the combined generosity of our state and federal governments, the typical Alaskan couple received a total of $7,718, unsolicited and unearned.
While 2008 remains unmatched, Alaskans nonetheless benefit from frequent abundance. When Alaska's rivers run a surplus, we catch extra fish. When there's a moose surplus, the hunting season is extended. When alpine slopes explode in purple, Alaskans give away blueberry jam, jelly and pies, with plenty left over for personal consumption. Alaskans exhibit an affinity for consuming surpluses. Unfortunately, our current oil surplus works inversely to other resource surpluses we harvest in Alaska. Today's world oil glut, rather than fill our freezer, empties our bank account.
All this talk of surplus reminds me of a friend who faced a similar problematic surplus a few years back. He and some buddies floated a remote river up north. Before the trip, the air taxi pilot warned their pickup location was in a tight spot, and they needed to keep weight to a minimum. Excess weight could require two flights and twice the cost. At the end of the week, the rafters hauled out at the designated pickup point, but record rains submerged part of the sandbar that served as the airstrip. The strip had shrunk to half its normal length. They still had two cases of beer and only one night to drink it, which they did. Although oblivious to the pilot buzzing their camp the next morning, and although too drunk to help load gear, they drank the surplus and thus, nudged the plane back in the air.
So here's an Alaska-born solution to the oil glut — drink the surplus. It's a solution that taps into more than one Alaskan strength. Consumption is as American as Budweiser. It borrows from Bush's economic stimulus strategy that urged every American to buy a new car. Americans lead the world in consuming everything but Vegemite, so consuming excess oil should be a painless way to return prices to record levels. And we all love a deal. Therefore, it's only natural to snap up $36 oil by the barrel.
And what do we do with that extra oil? We burn it. Trade in the Prius for a Hummer. That's right, no more dainty sipping. Abandon the Green Star upgrade and extend the life of that 1950s boiler. Turn up the heat and open the windows on cold winter nights. Demonstrate your commitment to the oil economy further. Take weekend vacations to Hawaii. Visit your estranged brother in Florida. Attend your 23rd college reunion at the University of New Brunswick. Catch every NFL game from the 50-yard line. Move to Wasilla and commute to Anchorage. We can consume our way out of this mess.
But why should private citizens take steps to correct energy market woes? After all, a low oil price has its benefits. Admittedly, I let out a whoop at the gas pump when I fill my Chevy pickup for half the previous cost. As I prepay at the counter, I toss in a bag of Doritos and a can of Red Bull to celebrate my fuel savings. But as I drive away from the pumps, the chemical aftertaste and the powder coating my tongue remind me that low oil prices are unhealthy in the long run.
Wait, you say. What about global warming? Hold that thought. Let's tackle one problem at a time. Once our drinking binge restores oil markets, then we can ponder climate change as we watch Winter Olympic reruns on the History Channel. But first, we must perform our patriotic duty and consume our way to prosperity. If the oil industry won't save itself, then we must save it and Alaska's economy too. After we revive the oil industry, we can saunter in to the next global warming summit with Alaska-sized waistlines and worldwide apologies.
Drink up, Alaskans. We've got to get this plane back in the air.
Thomas Pease was born in Anchorage, where he teaches in the public school system. He says he values Alaska's abundance and hopes to see it preserved for future generations.
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